Biotech Challenges & Financing

Within the realm of biotech, there will always be a host of challenges that companies must overcome—financing being one of those. Nancy Thornberry, chair of research and development and founding CEO, Kallyope, and Jay Galeota, president and CEO, Kallyope, provide insight into how the company approaches which therapeutic to pursue, challenges unique to biotech, and how to acquire needed funds.

Rivers: In general, how can companies approach which therapeutic area to pursue? How has your company gone about that?

Nancy Thornberry, Founding CEO and Chair, Research and Development, Kallyope

Thornberry: Kallyope is a platform-based company with a focus on gut and gut-brain biology. This physiology is relevant to multiple diseases of high unmet need, spanning metabolism, immunology and inflammation, and neurological disorders. This is both the opportunity and the challenge. Completely novel biology is particularly challenging; and for this reason, we have initially focused on leveraging our platform to pursue known biology in fundamentally new ways. Beyond the usual considerations (e.g., unmet need, human genetics evidence, translatable biomarkers, and predictive models), we focus on targets and disease areas that are enabled by our platform technologies, which include single-cell sequencing, gut organoids, and gut-targeted chemistry. This enables us to pursue our programs in a scientifically rigorous way that goes beyond what was previously possible.

Rivers: What are some challenges unique to biotech, and how can they be overcome?

Jay Galeota, CEO and President, Kallyope

Galeota: In biotech (vs. pharma), one generally has a limited set of programs; and with the low probability of success in early-stage drug discovery and development, a successful outcome occurs in the face of significant risk. Because of this, emphasis should be placed on building a company in which a de-risking mindset is front and center.

This involves four areas of focus:

1. Advancing multiple programs in parallel
2. Continuously evaluating individual programs, cataloging the risks, and developing risk-mitigation strategies for each
3. Diversifying the portfolio to ensure it is not concentrated too heavily in a specific area of biology (unless well-validated)
4. Staying laser-focused on the competition and developing a differentiation strategy early in the program’s life cycle.

Rivers: Financing is a big topic in biotech. What are some ways companies can acquire needed funds?

Galeota: The reality is that there are two or three core drivers in a company’s equity story and the investment case the public market will have for that company. Successful leaders identify, understand, and advance these programs to the next value inflection point and (at the same time) think creatively about business development opportunities that enable the company to move its portfolio forward in a cost-conscious manner, conserving capital. Thus, when markets are favorable, value has been created, and the company is in a stronger position of leverage.

About the contributors

Jay Galeota is the president and CEO of Kallyope, serves on its board of directors, and is a 34-year industry veteran known for his passion for innovation and development of breakthrough products and business opportunities.

Nancy Thornberry is the founding CEO of Kallyope, having served in this position since its launch in November 2015 through September 2021. She remains on the board of directors and is chair, research and development, working closely with the current CEO to oversee the research and development functions of the company.